The best debt consolidation loans for bad credit from direct lenders include personal loans from FreedomPlus, LendingPoint and Avant. All of these companies are direct lenders because they provide loan funds directly to their customers, rather than simply matching them up with other lenders (e.g. LendingClub). However, FreedomPlus is the only one of the three that offers direct debt consolidation in the sense that it will send payments to your old creditors on your behalf, rather than giving you the money to disburse. The other two will only make a deposit to your bank account, which you can then use to pay off your existing debts.
There are a few other personal loan providers that are able to provide direct payments to existing creditors, such as Marcus by Goldman Sachs, Payoff and Discover. But those lenders unfortunately don’t accept applicants who have bad credit. So FreedomPlus is the best choice if you don’t want to have to send a check or bank transfer yourself. Otherwise, LendingPoint and Avant are still solid options.
Debt Consolidation Loans for Bad Credit from Direct Lenders:
FreedomPlus: Credit score of 620+ required. Borrow $7,500 to $40,000 for 25 to 60 months. APRs range from 5.99% to 29.99%. 0% to 5% origination fee. Will directly pay off old creditors 7 to 10 business days after approval.
LendingPoint: Credit score of 580+ required. Borrow $2,000 to $36,500 for 24 to 48 months. APRs range from 9.99% to 35.99%. 0% to 6% origination fee. Will not directly pay off old creditors.
Avant: Credit score of 600+ required. Borrow $2,000 to $35,000 for 24 to 60 months. APRs range from 9.95% to 35.99%. Up to 4.75% origination fee. Will not directly pay off old creditors.
Keep in mind that even though you can consolidate debt with bad credit through these lenders, you may not want to. With bad credit, you’re likely to get an APR at the high end of the lenders’ ranges. At 30% or more, that might not save you much money compared to the current cost of your debts.
As an alternative, you might want to see if any of your local banks or credit unions offer a secured debt consolidation loan. You will have to put up collateral to get the loan, but your approval odds will be higher than they would be for an unsecured loan. Plus, your APR is likely to be lower.
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